Institutional investment managers have moderated their expectations for global growth, according to a quarterly survey conducted by Northern Trust Global Advisors (NTGA), and more than two-thirds of those surveyed expect that sovereign debt concerns regarding Portugal, Italy, Ireland, Greece and Spain will weigh on global markets for the next six months or longer.

In a significant shift from the prior four quarters, a majority of managers no longer expect global growth to accelerate over the next six months. 75% of those surveyed by NTGA in the second quarter anticipate that global growth will remain the same or decelerate, while 25% still expect growth to accelerate. Accordingly, institutional managers are less concerned about the prospect of inflation or rising interest rates, according to survey.

According to the survey report, managers are also increasingly optimistic about market valuations. For the first time since the second quarter of 2009, the majority of managers (62%) stated that the US equity market, as measured by the S&P 500 Index, is undervalued. Select areas of international markets are also seen to be attractive: 40% of managers now believe that emerging market equities are undervalued.

Managers in the second quarter poll were asked for their views on the sovereign debt concerns regarding Portugal, Italy, Ireland, Greece and Spain. A strong majority of managers (68%) expect the concerns over these Eurozone countries to weigh on global markets for more than six months. As a result, 21% of managers have reduced exposure to these countries, while the majority of managers (57%) have avoided these countries altogether.

The survey of approximately 90 institutional managers was conducted by NTGA, the multi-manager arm of Northern Trust Corporation. Respondents, all of whom participate in NTGA’s external manager platform, were polled in mid-June.

Chris Vella, global director of research for NTGA, said: “Our second quarter survey revealed less optimistic growth expectations from our managers. In an environment where growth is less broad-based, employing managers that are strong stock pickers can be even more valuable.”

Kelly Swiatek, investment analyst at NTGA, aid: “This quarter our managers revealed to us their concern that the issues relating to the Eurozone countries may be a longer-term problem. This issue is likely weighing on their views of global economic growth.”